Emanuel ratchets up pressure on Quinn to sign pension bill
BY FRAN SPIELMAN AND DAVE MCKINNEY Staff Reporters April 9, 2014 4:27PM
Gov. Pat Quinn joined Mayor Rahm Emanuel and U.S. EPA Administrator Lisa Jackson to make commitments to restore and safeguard the Chicago River at Wrigley Global Innovation Center, 1132 W. Blackhawk St. Thursday, April 12, 2012. | Rich Hein~Sun-Times
Updated: May 11, 2014 9:57AM
Portraying Chicago as a city at a crossroads, Mayor Rahm Emanuel turned up the heat on Gov. Pat Quinn Wednesday to sign off on his plan to raise property taxes and cut retirement benefits to save two city employee pension funds.
“The problem is not what we’re proposing. The problem is that, for years, we allowed a problem to emerge and develop to the [point] where Chicago is distinct in how severely underfunded our pensions are compared to any other big city. What we’re doing is addressing it,” the mayor said.
“Moody’s has now downgraded us four times. We’re two notches away from junk. I don’t think that’s what you want for the third-largest city in America. I don’t want it for my hometown when we could use our political capital to address the long-term future and health of the city of Chicago.”
The mayor then raised the dreaded D-word. As in Detroit.
“I totally reject comparing Chicago to Detroit. Our economy is so much stronger, so much deeper, our university system, our airports, our transportation system, our education. But Chicago stands out because of its unfunded pension liabilities and debt,” Emanuel said.
“If we didn’t address those challenges, our Laborers and Municipal pension funds would go belly up and pull the city with it. The responsible thing is not to allow that to happen, not to let the funds go belly up and pull the city with it, but step in, do the responsible thing to address a challenge that has been years in the making.”
Earlier this week, the Illinois House and Senate approved Emanuel’s plan to raise property taxes by $250 million and employee contributions by 29 percent over five years to shore up the Municipal Employees and Laborers Pension funds.
The same-day approval came after Emanuel stripped out any reference to the property tax and shifted the political burden to Chicago aldermen, who are 10 months away from re-election.
But Quinn, who had said “no can do” to the property tax hike, has 60 days to act on the bill. He has hinted he might take all of it before deciding how to handle the political hot potato.
Quinn is searching for alternatives to the $250 million property tax increase after offering property tax relief to sweeten the bitter pill of his plan to make permanent a temporary increase in the state income tax.
He has also dangled approval of the elusive Chicago casino that’s been on the city’s wish list for 25 years.
But Emanuel said Wednesday he’s standing pat with his “balanced, measured and responsible” plan because Moody’s, the Wall Street rating agency that has dropped Chicago’s bond rating four notches in eight months, is demanding a “reliable” source of revenue.
The mayor said it’s “not my priority” to go back to the property tax to save police and fire pension funds that are closer to the brink than the Municipal Employees and Laborers pension funds that the bill on Quinn’s desk is designed to save.
But he wouldn’t rule it out, either.
What he did rule out — pointedly and specifically — was a city income tax increase and a commercial lease tax like the one championed by Mayor Harold Washington during the mid-1980’s. A Circuit Court judge overturned the 6 percent tax lease tax in 1986. The City Council repealed the tax before the city’s appeal was heard.
“Everybody has to give something so nobody is asked to give everything. And that’s why it was, in my view, a responsible plan to do. Other people will have ideas. One that I reject is the idea of a city income tax. That’s not the right way to go. This is a responsible way to do it,” Emanuel said.
“The city income tax, office lease [tax are both] non-starters. I’ve addressed what I think is a responsible way to meet a challenge that I want to remind didn’t just creep up on us….Our employees are contributing more. They’re making changes. We’re stepping up in a way that does it in a methodical and systematic way.”
What about the jackpot from a Chicago casino?
“How long has it been laying out there?... A lot of the credit agencies want something that’s reliable that they count on. I’m trying to stop the city from going to a place that I don’t think it can if we…do the morally responsible thing to ensure that every worker, every retiree gets a pension,” he said.
Earlier this week, Emanuel felt sandbagged by the governor when Quinn publicly ridiculed the mayor’s plan and ruled out a massive property tax hike.
That only further strained an already difficult relationship between the two leading Democrats.
“I placed a call to him this morning. We missed each other. But we will be in conversation about when and the merits of what, I think, is a strong bill for the city retirees and workers,” the mayor said.
Next year, Chicago is required by state law to make a $600 million contribution to stabilize police and fire pension funds that have now have assets to cover just 30.5 percent and 25 percent of their respective liabilties.
Emanuel wants the General Assembly to put off the balloon payment until 2023 to lift the sword hanging over Chicago taxpayers and give him time to negotiate pension reforms with police and fire unions.
Before approving the $250 million property tax increase to save the Municipal Employees and Laborers Pension Funds, Chicago aldermen want to know what the plan is for police and fire so they don’t have to, as one alderman put it, “walk the plank twice."